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Calculator
Default extra cost = Gusto Solo at $49/month + $6/person for one person ($660/year). Add your accountant’s fee for the S corp return (Form 1120-S) and any state S corp tax.
General information from IRS publications, not tax advice. Your situation may differ — confirm with a CPA or enrolled agent before you act. Verified October 18, 2026. We may earn a commission if you sign up through our links, at no cost to you. How we’re funded.
How it works
- As a default LLC: self-employment tax = 12.4% Social Security on 92.35% of profit (capped at the wage base) + 2.9% Medicare on 92.35% of profit.
- As an S corp: payroll tax = 15.3% on your salary (Social Security portion capped at the wage base), employee and employer halves combined. Distributions above salary carry no self-employment or payroll tax.
- Wage base: $184,500 for 2026 and $192,300 for 2027 (Social Security Administration).
- Not included: income tax effects, the 0.9% additional Medicare tax, state taxes and unemployment insurance.
If the numbers look good
- Read LLC vs S corp — eligibility, reasonable salary and the Form 2553 deadline.
- Ask a tax professional to sanity-check your salary and state costs.
- Set up payroll before your first salary payment.
Gusto
From $49/mo + $6/person
- Solo plan built for paying yourself a reasonable salary as an S corp
- Unlimited payrolls with automatic tax filings
- Contractor payments and 1099s
Watch out: Per-person fee adds up with larger teams
1-800Accountant
Free consultation
- Free consultation
- Year-round team: tax preparer, bookkeeper, payroll specialist and advisor
- Handles quarterly estimated taxes and audit defense
Watch out: Pricing is quoted after the consultation
QuickBooks Online
From $38/mo
- The bookkeeping software most accountants use
- Free plan for very small businesses (2 invoices/month)
- No annual contract
Watch out: Price rises quickly with users and features
Frequently asked questions
How does an S corp save on taxes?
As a default LLC, all net profit is subject to 15.3% self-employment tax. As an S corp, you pay payroll tax (also 15.3% combined) only on the reasonable salary you pay yourself; the remaining profit can be taken as distributions without self-employment or payroll tax.
At what profit does an S corp make sense?
It depends on what a reasonable salary is for your work and on the extra costs (payroll service, a separate Form 1120-S, any state S corp tax). Enter your numbers above — the savings only matter once they clearly exceed those costs.
What is a reasonable salary?
The IRS requires S corps to pay shareholder-employees reasonable compensation before taking non-wage distributions, and can reclassify distributions as wages. Factors include your training and experience, duties, time spent and what comparable businesses pay for similar work.
What does this calculator leave out?
Income tax effects (the deduction for half of self-employment tax, the employer payroll tax deduction, the qualified business income deduction), the 0.9% additional Medicare tax, state taxes and unemployment insurance. Use it to see whether a conversation with a CPA is worth having.
How do I elect S corp status for my LLC?
File IRS Form 2553, signed by all owners, no more than 2 months and 15 days after the start of the tax year it should take effect (by March 15 for a calendar year). Late-election relief may be available.